Naperville business leaders look toward future

Chamber of Commerce holds forum for executives

October 29, 2013|By Kristy Kennedy, Special to the Tribune

John P Calamos Sr., CEO and global co-chief investment officer of Naperville-based Calamos Investments, was part of a panel hosted by the Naperville Area Chamber of Commerce asked to give an economic forecast for next year. (Jeffrey Ross Photography, Handout)

Terry Savage, a nationally known expert on personal finance, the market and the economy, asked a group of Naperville business leaders to predict interest rates, the growth of gross domestic product and to highlight one thing to watch for next year that will impact the economy.

They predict the 10-year Treasury interest rate to increase after March, the economy to grind along next year with gross domestic product growth ranging from 2 to 2.75 percent, and the continued growth of natural gas consumption along with federal policies to affect the economy.

The panel of gurus assembled for an event hosted last week by the Naperville Area Chamber of Commerce and moderated by Savage.

Speakers included John P. Calamos Sr., CEO and global co-chief investment officer of Naperville-based Calamos Investments; Blu Putnam, managing director and chief economist of CME Group; and J.D. Foster, deputy chief economist for the U.S. Chamber of Commerce. The three spoke to an audience of area business and political leaders, and answered questions about the stability of America's middle class, the outlook for young people finishing college and where they would make a long-term investment if $1 million fell into their laps.

The three agreed Treasury rates will remain stagnant until Federal Reserve Chairman Ben S. Bernanke steps down in January and is expected to be replaced by Janet L. Yellen, who is slated to be confirmed by the Senate in November. Following a March meeting of the Federal Open Market Committee, panelists expect interest rates to rise.

"The debate is going to change," Putnam said. "It's not going to be about the payroll numbers; it's not going to be about unemployment; it's going to be about how big should the central bank be. The central bank has gotten, in my opinion, too large."

If interest rates go up, Calamos views that as good news. "For the Fed to increase rates, they will have the confidence that the economy is growing," he said. "Rates going up is not negative." In turn, that will have a positive impact on the market, he said.

Panelists also agreed the growth of the economy is being held back by politics and federal policies. Uncertainty affects consumer spending and keeps business leaders from feeling confident enough to grow. Foster said he generally hears from business owners around the country that they are doing OK, but could be better.

"That's really where the economy is," he said. "We should be outraged by that. Four years after the end of the recession and we should be doing great."

A bright spot in the economy is the abundance of natural gas as an inexpensive, relatively clean energy resource, Putnam said. He predicts the federal government will allow American companies to export the fuel.

"The world is going to change because energy is changing," Putnam said. Another plus is the improvement in many housing markets. Foster said rising home values allow more people out from underwater mortgages, freeing them to move if they find better jobs.

As for the other questions, Calamos and Foster said the economy needs to grow jobs to strengthen the labor force. That, they said, is the best way to strengthen the middle class. Calamos added the growth of a middle class in other parts of the world like China will help the world economy. Meanwhile, college graduates will have an easier time finding jobs if their majors directly apply to a particular career.

Finally, as to where the three would invest $1 million for 20 years? Putnam would invest in countries with a young population, saying he doesn't think America is going to handle the aging of Baby Boomers well. Foster would invest in equities and high technology. Calamos would take a conservative approach in a global equity portfolio actively managed through that time frame.